I would have coded exactly as you did or queried the provider to link the manifestations to diabetes. Your interpretation of the guidelines is correct! The provider would need a statement such as "Nephropathy due to diabetes" or "diabetic nephropathy" in order to support 250.42. We have gone through external audits and this is one area the providers have been heavily educated on. We were told that DM documentation was a common area for errors.
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